Subsidies cut for solar power producers

Cash-strapped Greece cut its subsidies for solar power producers on Wednesday, saying it could no longer afford to pay the current rates and that it had already licensed all the units it needs to meet its renewable energy targets.

The windswept and sun-soaked country has been trying to attract renewable energy investment by offering 20-year supply contracts at generous, guaranteed prices.

In an effort to lift its ailing economy out of the doldrums, Athens has even presented plans to become Europe’s solar energy powerhouse, attracting up to 20 billion euros ($26.2 billion) in investment in the decades to come.

Like other European countries in recent months, however, Greece has been forced to cut subsidies to cope with a government budget squeeze and avoid oversupply in the sector.

«In today’s difficult economic environment, it is necessary to ensure the viability of the financing mechanism in order to secure the operation of the units already installed and to develop new ones,» the energy ministry said in a statement.

The new so-called «feed-in» tariffs apply to all solar power producers coming online from February. Those generating more than 100 kilowatts will see their subsidies cut by 12.5 percent to 292.08 euros per megawatt hour (MWh). The rate will then drop every six months to hit 203.20 euros/MWh by August 2014